Houston’s office market is showing signs of stabilization. It’s one of only three major U.S. markets to post positive net absorption over the past year, totaling 650,000 SF. Still, activity has slowed. Tenants signed 7.7 million SF in the first half of 2025—the lowest mid-year total in three years. Most rightsizing is complete, but large-tenant demand remains soft due to limited first-generation space.
The divide between old and new buildings is growing. Nearly 70% of available space is in properties built before 1980. In contrast, newer product in suburban submarkets like Katy Freeway East and West and The Woodlands is outperforming, supported by amenities and proximity to population growth.
Tenant leverage remains strong. Concessions are holding steady, with build-out allowances ranging from $75–$120/SF and six to eight months of free rent on five-year terms. Average asking rents sit at $29.00/SF—up $2/SF from 2019—with trophy buildings pushing higher.
Overall availability has declined slightly to 73.1 MSF, and sublease space is also trending down. With over 80% of the 2.1 MSF under construction pre-leased and few new starts, high-quality space is tightening. Vacancy is expected to remain elevated but stable near 21.9%. Office-using job growth has flattened, and economic uncertainty may delay new leasing. While tenants retain leverage in most areas, competition for top-tier space is picking up.
An additional 17 million square feet is remaining in the development pipeline, much of which is unleased. As a result, this could provide additional downward pressure on rental rates in the near term. Still, annual net absorption ranked among the highest in the country, helping landlords to not feel compelled to greatly increase tenant concession packages.
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An additional 17 million square feet is remaining in the development pipeline, much of which is unleased. As a result, this could provide additional downward pressure on rental rates in the near term. Still, annual net absorption ranked among the highest in the country, helping landlords to not feel compelled to greatly increase tenant concession packages.
Download the full report to learn more.